Knight-Ridder said that a mixed advertising picture was offset by "tight" cost controls. Total ad revenue rose just 3.1 percent from the same quarter a year ago, with classified ad revenue increasing 2.1 percent and automotive improving by 2.6 percent. The company reported strong ad growth at papers in Charlotte, N.C., suburban San Francisco and Saint Paul, Minn., and a weaker trend in Philadelphia, Miami, Kansas City and Fort Worth, Texas.

Sinclair Broadcast downgraded

Schroder & Co. analyst Niraj Gupta cut Sinclair Broadcast Group (SBGI)
SBGI, -0.86%
to "outperform" from "outperform significantly." The television and radio station owner is expected to report third-quarter results next week. Earlier this month, the company said during the fourth quarter and early 1999 it would sell a number of its radio and television stations for a total value of as much as $500 million.

The General Motors strike was a drag on third-quarter advertising sales for Sinclair. The strike similarly affected most other television station operator and a general economic downturn has crippled overall TV advertising spending.But Sinclair says political advertising will offset some of that weakness, enabling it to meet Wall Street earnings estimates for the period. The company also said its 54 radio stations have performed well in the second half. Sinclair shares fell 11/16 to 12 11/16 Friday.

The dove descends

Citing "additional start-up costs" at the company's PAX TV network, Goldman Sachs analyst Richard Rosenstein reduced his 1998 broadcast cash flow and operating cash flow estimates for Paxson Communications (PAX)
PAX, -0.16%
. Rosenstein dropped his broadcast cash-flow forecast to a loss of $24.5 million from a $5.7 million deficit, and reduced his operating cash flow number to a loss of $51.9 million from a loss of $33.1 million.

The analyst noted that PAX TV's household distribution covers just 70 percent of U.S. households, making it difficult for the network to reach its goal of achieving a prime-time national Nielsen rating of 1.0. If PAX TV can boost its distribution, meet its ratings goals and convert its audience "into meaningful advertising revenue," Rosenstein said, the stock "could hold significant upside." But until Paxson can deliver such results, the Goldman analyst will maintain his "market performer" rating on the shares.

PAX TV, which premiered Aug. 31, is banking on a core of family favorites like "Touched By An Angel," "Dr. Quinn, Medicine Woman," "Diagnosis: Murder," "Promised Land," "Dave's World," "Christy," "I'll Fly Away," "The Father Dowling Mysteries," and other recent off-network reruns. The slate averaged a 1.1 rating so far which includes only the 31 Paxson markets officially rated by Nielsen.

Paxson shares fell 3/16 to 8 13/16 in recent trading.

Several readers have written to Media Report saying that they like Paxson's long-term potential. The question remains: What kind of ad-revenue increase can Paxson realistically hope for in a climate in which the Big Three networks are seeing significant declines in market share and an uncertain economy? If you've been following this column, you'll recollect analysts quoted as saying that the main value here is Paxson's 70-odd stations. If all else fails, the company can find a partner and try some other approach, or simply sell the properties for a reasonable profit.

Cable stocks reeled in

Shares Cox Communications (COX)
COX, -40.91%
fell 5 to 56 after Donaldson Lufkin Jenrette analyst Dennis Leibowitz downgraded the stock to "market perform" from "buy." The cut comes a day after CIBC Oppenheimer slashed Cox to "hold" from "buy." Leibowitz also cut Comcast (CMCSK)
CMCSK
to "buy" from "top pick." Both Cox and Comcast have had substantial run-ups in the last couple of weeks; Cox closed at 61 Thursday, compared to its Oct. 12 close at 49 1/4. Comcast finished at 50 3/4 from just over 40 on Oct. 8. See related story.

MGM sets new record date for rights offering

Metro-Goldwyn-Mayer (MGM)
MGM, -0.89%
set Oct. 26 as the new record date for its proposed $700 million rights offering. Two months ago, MGM's board approved an increase in the offering to $500 million from $250 million. Also revealed on Thursday, the studio announced that it finally agreed to buy PolyGram Filmed Entertainment's 1,300-film library from Seagram (VO)
VO, -0.06%
for $250 million.

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